William Harris For the United States, Eric Liu (epliu@msn.com)

Overview

Harris is the CEO of Intuit and was a government witness. The gist of his testimony was that the dominance of Windows forces applications vendors like Intuit to deal with Microsoft on terms essentially dictated by Microsoft. In this case, those terms held that in order to acquire prime placement for its products and services on the Windows 98 active desktop, Intuit would have to forego business relationships with Netscape, including a prior arrangement to distribute and promote Navigator.

From the governments point of view, Harris was a potentially strong witness: he came from a company not obviously identified with the anti-Microsoft camp; he could speak to the ripple effects of Microsofts anticompetitive practices; and he was prepared to talk about the remedies needed to rein in MS. Unfortunately, he turned out to be less than optimal. Although he was articulate and sympathetic, when pressed by MSs John Warden, Harris often volunteered more information than needed  and enough, sometimes, to cast a shadow of ambiguity upon his own claims. Moreover, he testified more than once that Intuit had chosen to incorporate IE into its products, rather than Navigator, because IE was a better technological fit  not, or at least not primarily, because those were the terms Microsoft had demanded.

The fact that David Boies, for the DoJ, kept the redirect to a bare minimum and declined during redirect even to raise the issue of remedies  an issue that had been a prominent part of Harriss direct testimony  suggests perhaps that the government began to see Harris as a less than fruitful witness.

Direct

 The premise of the 47-page direct testimony was straightforward. It was that Windows is the premier distribution mechanism for any software application and gives Microsoft the unparalleled power to favor one product over another by tying competitive products to the operating system, as it has done by distributing Internet Explorer with each copy of Windows. This control, in turn, gives MS the power to take possession of another prime piece of desktop real estate, the browser start page.

 Harris described the agreement that Intuit signed, granting Intuit products placement on the Windows desktop on the condition that Intuit terminate its business dealings with Netscape. In recounting the negotiations, he suggested that Intuit was virtually coerced into those terms: entry through the choke point of Windows was deemed by Intuit to be worth even the price of abandoning a longstanding partner like Netscape.

 The theme of the balance of his direct testimony was that the court must step in now to limit MSs ability to be the gatekeeper to the Internet, and in a way that can be applied against subsequent changes in Microsofts conduct. He called for a broad remedy based upon the principle of operating system neutrality, by which he meant that Microsoft should not use its operating system control in a manner which is discriminatory or exclusionary in the development, marketing and distribution of either its own or third party content, services or products.

Cross

 During the cross-examination, Harris mainly played defense. Warden began by putting forth a rather specious analogy, asserting that Microsoft had monopoly control of the desktop only in the sense that Time has a monopoly over the cover of its magazine or Intuit over the start page of its own corporate website. He then tried to suggest that Microsoft should no more be required to grant open access to the desktop than Intuit should be required to allow banks to advertise in Quicken. But Harris dismissed this comparison, pointing out that Quicken, unlike Windows, is not an essential service for which there is no effective substitute. This prompted Warden, in a moment of lawyerly bravado, to dare Harris to offer a legal interpretation of the essential facilities doctrine. Harris declined.

 The next tack that Warden tried to take, and that Harris did his best to resist, was the idea that placement on the Windows desktop was no guarantee of success. Warden pointed to the Microsoft Network, which, despite having an icon on the desktop, did not thrive as an online service and certainly did not dislodge AOL. True, Harris said, but the new MSN, reconfigured as a portal site, was now doing very well.

 Up to this point, Warden had not been very successful in getting Harris to concede anything of substance. But a central theme now emerged in the testimony, and that was Wardens attempt to downplay the restrictive nature of the MS-Intuit deal (which provided Intuit platinumplacement on the active desktop in exchange for a promise not to deal with Netscape or promote its browser). Although this deal was the raison detre for Harriss presence, this is where the governments case suffered most. Warden was able to make Harris concede that a significant part of the reason why Intuit decided to incorporate Internet Explorer into its products rather than Navigator was that Netscape proved simply unable to meet the technical requirements Intuit had laid out for a componentized browser. This was an effective point for MS.

 Warden also pointed out that even after the deal was waived in April 1998 (when MS abandoned its active desktop plans), Intuit nonetheless continued to embed IE in its products  and did not try to bundle Navigator or otherwise re-establish a relationship with Netscape. Harris attributed that fact to the inconvenient timing of Intuits product cycles, but he was not entirely convincing.

 Warden then tried again to minimize the importance of placement on the active desktop channel bar, and he did this by arguing that far from being a choke point, the channel bar was a bust and had certainly not been an effective means of disseminating IE. Harris conceded that the whole deal had been a disappointment to Intuit, but he insisted that the contract had nevertheless prevented Intuit from doing what it would naturally have preferred to do, which was to maintain a working relationship with Netscape. Finally, on this theme of downplaying MSs power, Warden asserted that it is ISPs who truly control the gateway to the Internet, since they set the default page. Harris did not have much to say in response, except that there remains a clear incentive for MS to control that default URL.

Redirect

 Boiess redirect centered around excerpts of the videotaped Bill Gates deposition. The first excerpt focused on emails sent to Gates from his subordinates confirming the restrictive terms of the Intuit deal. His explicit point was that Gates had been made fully aware of the restrictive aspects of the Intuit deal; his subtext was that Gates was dishonest and clearly had something to hide. This was illustrated best in a passage during which Gates claimed to be utterly incapable of comprehending the meaning of the email.

 Boies tried also to establish through email and videotape that Gates had personally informed his subordinates that the no-Netscape clause was non-negotiable. But here, inexplicably, Harris candidly and without prompting admitted that he had never heard this directly from Gates, that it came only from the subordinate, who may well have been invoking Gatess name as a mere negotiating tactic. You could practically see Warden smiling appreciatively as Harris said all this.

 Scrupulously  and from DoJs point of view, perhaps frustratingly  Harris also admitted that Intuit had chosen IE on the technical merits, and would likely have done so even absent the restrictive contract terms. He helped the governments case only by adding, at Boiess prompt, that Intuit would have preferred to include Navigator as well as IE and that, but for MSs demands, the company would never have agreed to forego its relationship with Netscape.

Conclusion

 The net result was something of a wash. The government, mainly through the Gates clips, was able to remind the court of MSs credibility problems and of MSs power to intimidate rivals. But MS was able to cast its actions and the terms of its deal with Intuit in the most favorable light possible. This was not as strong a witness as the government had probably wished for.

-- Anonymous, January 21, 1999